Nestin-expressing stem cells of the hair follicle, discovered by our laboratory (Proc Natl Acad Sci USA 2003; 100:9658-61[1]), have been shown by our laboratory to be able to form neurons and other non-follicle cell types (Proc Natl Acad Sci USA 2005; 102:5530-4 [2]). Our laboratory has shown that the nestin-expressing stem cells from the hair follicle can effect repair of the peripheral nerve (Proc Natl Acad Sci USA 2005;102:17734-8 [3]) and spinal cord injury (Cell Cycle 2008; 7:1865-9 [4] and Cell Cycle 10, 830-839, 2011 [5]). Transgenic mice, in which the nestin promoter drives GFP (ND-GFP), were used to characterize the nestin-expressing hair follicle. The cells have very long processes extending from them as shown by confocal microscopy and differentiate into neuronal cells at high frequency as well as into multiple other non-hair follicle cells in vitro. The hair follicle sem cells differentiate into neuronal and glial cells after transplantation to the injured pheripheral nerve and spinal cord and enhance injury repair and locomotor recovery. In a recent study, vibrissa hair follicles, including their sensory nerve stump, were excised from ND-GFP transgenic mice and were placed in 3D histoculture supported by Gelfoam(R). -III tubulin-positive fibers, consisting of ND-GFP- expressing cells extended up to 500 m from the whisker nerve stump in histoculture. The growing fibers had growth cones on their tips expressing F-actin. These findings indicate that -III tubulin-positive fibers elongating from the whisker follile sensory nerve stump were growing axons. The growing whisker sensory nerve was highly enriched in ND-GFP cells which appeared to play a major role in its elongation and interaction with other nerves in 3D Gelfoam(R) histoculture, including the sciatic nerve, the trigeminal nerve, and the trigeminal nerve ganglion. The results suggest a major function of the nestin-expressing stem cells in the hair follicle is for growth of the follicle sensory nerve (J. Cell. Biochem. 114, 1674-1684, 2013 [6], In Vitro Cell Dev Biol Anim 48:301-305, 2012 [7]). The nestin-expressing cells of the sciatic nerve were also found to be multipotent as the nestin-expressing cells in the hair follicle. When the nestin-expressing cells in the mouse sciatic nerve were cultured on Gelfoam and were imaged by confocal microscopy, they were observed forming fibers extending the nerve. The fibers consisted of ND-GFP-expressing spindle cells, which co-expressed the neuron marker b-III tubulin, the immature Schwann-cell marker p75NTR and TrkB which is associated with neurons. The fibers also contain nestin-negative spherical cells expressing GFAP, a Schwann-cell marker. The b-III tubulin-positive fibers had growth cones on their tips expressing -actin, indicating they are growing axons. When the sciatic nerve from mice ubiquitously expressing red fluorescent protein (RFP) was co- cultured on Gelfoam with the sciatic nerve from ND-GFP transgenic mice, the interaction of nerves was observed. Proliferating nestin-expressing cells in the injured sciatic nerve were also observed in vivo (PLoS One 8(6), e67153, 2013 [8]). These results demonstrate that Gelfoam(R) is a powerful scaffolding for nerve growth effected by nestin-expressing stem cells. The hair follicle is the perfect source of the nestin-expressing stem cells due to easy access and a rich supply and lack of ethical or tumorgenicity issues of ES and iPS cells. In the present application, nestin-expressing cells hair follicles will be put in Gelfoam(R) histoculture to form growing nerves. The Gelfoam(R) will serve as a physiological scaffold of the growing nerve for transplantation and repair in mice with a severed sciatic nerve or injured spinal cord. The Specific Aims of the Phase I application are: 1. Develop Gelfoam(R) culture of nerves grown from hair follicle nestin-expressing stem cells for transplantation and rapid and effective repair of the severed sciatic nerve in mouse models. 2. Develop Gelfoam(R) cultures of nerves growth form hair follicle nestin-expressing stem cells for transplantation and rapid and effective spinal cord injury in mouse models. These Aims will be further developed in Phase II using human hair follicle for clinical application in Phase III as a safe, accessible and effective alternative to E and iPS cells for regenerative medicine.